By DEBIPRASAD NAYAK and ERIC YEP
MUMBAI -- India's state-run Petronet LNG said
Thursday that it has signed a preliminary agreement with
US-based United LNG to purchase around 4 million tpy of
gas for 20 years.
gas importers are fast sealing deals to secure supplies as
demand far exceeds domestic output. The nation currently
produces about three-quarters of its natural-gas requirements,
but will need to import nearly half of its requirements within
a few years due to dwindling production.
Several gas-fired power plants are already shuttered or
operating below capacity due to a shortage of gas.
In a statement, Petronet LNG said it expects to finalize the
agreement by the end of this year. The supply of LNG could
begin sometime in 2017-18, R.K. Garg, Petronet LNG's director of finance, told
television channel CNBC TV18.
Buyers in Asia are looking to the US to meet their
increasing energy requirements, as the shale revolution has
left North America with a huge surplus of gas and prices that
are far below those in Asia or Europe. LNG
prices in Asia are often several times higher than in the US
because of a regional supply deficit. Japan, the world's
biggest importer of LNG, pays about $18 per million British
thermal units, versus $4 in the U.S.
While the US has a surplus of cheap gas now, rising import
demand from Asian countries is likely to raise hackles among
some US industry groups and lawmakers who have recently been
advocating strict limits on energy exports to Asia citing
potential increases in domestic fuel prices.
Petronet LNG said United LNG would supply the super-cooled
gas through the Main Pass Energy Hub based off the Louisiana
coast in the southern US.
In 2011, GAIL (India), a state-run gas
processing and distribution company, signed a contract to
buy around 3.5 million tpy of LNG for 20 years from Cheniere
Energy's Sabine Pass facility in Louisiana.
A boost in LNG
exports would have many positive effects on both the US and Indian economies, Nirupama Rao,
India's ambassador to the US, wrote in The Wall Street
Journal earlier this month.
"For the US, it would help create thousands of jobs and an
expanded revenue stream for the federal government. For India, it would provide a steady,
reliable supply of clean energy that will help reduce our crude
oil imports from the Middle East and provide reliable energy to
a greater share of our population," she wrote.
Dow Jones Newswires